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  3. 2 4 marks the government spends 200 on improving port...

Question: 2 4 marks the government spends 200 on improving port...

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2. [4 marks] The government spends $200 on improving port facilities to provide farmers with access to a new market outside the country. This results in farming receiving an extra $400 for their products but spending an extra $225 on diesel fuel to transport their products to the ports. The market value of the extra fuel includes $45 tax, which is imposed to discourage consumption of fuel because of its related health effects. There are no non-referent groups identified in this project. (a) Complete the classification of net benefits by entering the values under the appropriate columns: (2 marks) Net Benefits Accruing to: t Group Non-Referent Group(b) Continuing from the above example, suppose now that the extra fuel was biofuel such a blend of diesel and ethanol- which results in lower emissions of particulates and lower associated health costs compared with regular fuel. The production cost of biofuel is $220, and that a corrective subsidy of $20 is paid to producers to render and the subsidy are corrective, redo the net benefit calculations on the assumption that the fuel saved was biofuel. Complete the classification by entering the net benefits in the columns provided: (2. earkes) Net Benefits Accruing to: Non-Referent Group Referent Group

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